Buying Still Cheaper Than Renting!
In a recent Article published by Real Estate global network; Across the country at today's sales and rent prices, buying is cheaper than renting until the 30 year fixed rate reaches 10.5%. Last week we hit the 4.625% mark! that means that it would have to rise quite a bit to get anywhere near the 10.5% mark. The recent increase in the 30 year fixed rate raised the monthly payment on a $200,000 mortgage by $56, or 6%. However, because mortgage rates are still near historic lows, and because values fell so much after the housing bubble burst and remain low relative to rents, owning a home is still much cheaper than renting one. What this means that the recent jump in interest rates doesn't change the rent versus buy calculations very much.
The fact remains that buying is still cheaper than renting as long as interest rates stay below 10.5%. At 3.9%, the current 30 year fixed rate according to Freddie Mac, buying is 41% cheaper than renting across the U.S. at a 5% interest rate, buying is still 34% cheaper than renting. Mortgage rates would have to rise a great amount, all the way to 10.5% to change this to make renting more favorable than owning. Rates were about that high through most of the 1980s, but have been consistently below 10.5% since May 1990. Each market area has its own mortgage rate tipping point where renting becomes cheaper than owning a home. At 3.9%, buying is cheaper than renting in all of the 100 largest metros areas, which means the tipping point is above 3.9% everywhere. If you or anyone is renting stop throwing your money away and contact me so I can help you find your perfect home today!
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